The data we collect from our devices and our record of transactions made electronically and other data provide the backbone that supports some of the world’s biggest businesses. Personal data is also the nutrient for millions of small-scale enterprises and countless start-ups, transforming it into customer insight, market forecasts, and customized digital services. In the last two decades, the commercial use of personal data has risen in a wild west manner. However, thanks to the distrust of consumers, government actions, and the competition for customers, the days of the wild west are rapidly closing in.
In the early years of its existence, the data economy was built around the concept of a “digital curtain” that was designed to hide industry practices from lawmakers and the general public. Data was viewed as a property of the company and a secret that was kept secret by the company even though the data was derived from the private data of customers’ behavior. This curtain has since been lifted, and a combination of the government, consumers, and market forces provides users with more control over the information they create. Instead of being an asset that could be accessed freely, countries worldwide are beginning to view personal data as a valuable asset owned by individuals and held by trust businesses.
This is a more effective way to organize the digital economy. Giving people more control of their data can curb the sector’s most harmful exaggerations while also triggering a new generation of innovative ideas driven by the customer to allow customers to articulate what type of personalized experience and opportunities they would like their data to facilitate. In addition, while Adtech companies, in particular, will be the most severely affected, however, any company that has extensive collections of customer data will need to make significant modifications to its methods and procedures, huge companies such as financial institutions, utilities, healthcare companies as well as large retailers and manufacturers.
Leading firms are already adjusting to the new environment as it develops. The most crucial factor in this shift based on our study of trust and data and our experiences working on this subject with a range of companies is to encourage businesses to redesign their data processed by the new principles of consent, understanding, and flow.
Three distinct forces are causing change within the personal data industry. They are all rapidly becoming commonplace and intertwined, causing seismic ripples in the industry.
- Consumer distrust. The concept of “surveillance capitalism” that its creator Shoshana Zuboff defines as “an economic system that is based upon the illegal extract and manipulation of data from humans,” has become common currency and is capturing the public’s growing realization that their data is being sold, bought or used in a way that doesn’t have their permission — and their increasing resistance to it. The public is beginning to vote by their thumbs. In the principal North American market, both Facebook and Twitter have seen a decline in their active daily users.2. Actions by the government. Congress is moving to curb the power of big technology. In 2021, the state legislatures will have approved or ratified at most minuscule 27 privacy laws, which regulate data markets and safeguard the rights of individuals with digital identities. Legislators across the country, from California to China, are working on legislation similar to the GDPR in Europe. The EU has shifted its focus to controlling using AI. Once upon a time, businesses were over regulators’ heads today. They have to compete with the requirements for compliance across multiple jurisdictions.3—competition on the market. The year before, Apple’s update on the iPhone operating system enabled users to disable data harvesters’ capability to track their users across multiple applications. This was a welcome change giving users power and control over their data. It also sucked a hole into businesses that depend on cross-app tracking. It has cost the top social media platforms $10 billion in revenue loss during the second half of 2021. The parent company of Facebook, Meta, expects it to cost them another $10 billion all by 2022. Apple has created privacy protection as an essential competitive advantage: app developers and manufacturers of devices are now using privacy features to attract new customers.
This is a stunning convergence of forces moving towards a clear conclusion where people will soon be in complete control of their personal information. While people continue to want the benefits and conveniences which accrue from their data and data, they will soon be the ones who decide the rules for the information they give out and who the data is shared with. They want to be protected, governments are on their side, and technology companies are already catching up as competition for data privacy affects financial institutions’ bottom lines.
Challenges Ahead for Large Firms
For established businesses, the changes will present an entirely new set of data issues in addition to the existing ones. Large companies already struggle with a variety of internal disputes about customer information. They usually have an Information Officer Chief whose job is to ensure that data stays in the company: gather it, secure it, and protect the data from the hacker. There are also Chief Digital Officers whose job is to disseminate data to mine it, analyze it, and utilize it to attract users. A few have added Chief Data Officers, which is a highly insecure position due, surprisingly in part, to the lack of a defined role for the job and Chief Information Security Officers and Chief Privacy Officers.
These roles overlap in companies with extensive data collection and processing operations, many older systems, a complicated web of multilateral and bilateral data-sharing agreements, and often, an absence of clarity about what to do to bring data to their business. According to our research, up to 90 percent of today’s IT budgets are devoted to handling internal complexity. Still, very little is going towards data-driven technology that can improve efficiency or customer service.
The new economy of data won’t accept this situation for very long. If your company generates any value from personal information, You will have to alter the method you gather it, use it, share it, secure it, and make money from it.
The New Rules of Data
The rules we have adopted for the digital economy are pretty easy to understand. They are all stem from the fundamental idea that personal information is a resource owned by those who create it. However, each rule requires the break of old routines, habits, and networks.
Rule #1: Confidence in transactions. The first rule concerns consent. Companies have been collecting all the information they can about their existing and potential customers, their preferences, habits, and personal identities, transaction after transaction, often without the customers being aware of what’s happening. However, as the trend shifts to the control of customers, information obtained with valid consent is likely to become the most valuable of all. It’s the only information companies can take action on.
Companies must continue to build trust with their customers by clearly explaining how their data is utilized and what it means for them. Businesses can follow in the footsteps of newly-created cooperatives for data that offer users a variety of options for sharing data and secure each user’s consent to choose the option they’re the most at ease with. The more comprehensive and robust your consent policies are, the greater your client database’s value will become.
Rule 2: Awareness of the identity. Businesses must reconsider not just how they collect information from their clients but from their partners too. Today, enterprises transfer vast amounts of personally identified information (PII) through a complicated set of agreements on data which compromise security and privacy. However, the latest technology — specifically trust and learning networks that are federated can allow you to extract insights through data without acquiring or transferring the data. Co-designing algorithms and data may aid in removing understanding by structuring them to meet the requirements. Therefore instead of moving data around, algorithms swap non-identifying information instead.
In particular, most of Google’s applications, like the Swipe typing feature, enhance phone performance by analyzing customer data directly on mobile phones to collect performance data and then using those stats to send performance updates back to the phone while leaving the PII in the customer’s phones. Another company, Dspark, uses a similar approach to extracting information from highly-valued but sensitive personal mobility information. Park cleanses, aggregates, and anonymizes more than one billion mobile data points each day. Then, it transforms that data into valuable insights about everything from shopping to demographics that it sells to other businesses but not selling or sharing the data in itself.
Rule 3: Transfers are allowed to flow across silos. This rule is derived from the previous two and is a brand new method of organizing internal teams working on data. Suppose all your customer information is deemed to have consented, and you’re gaining knowledge without the need to transfer it. In that case, CIOs and CDOs do not have to operate in silos, each trying to lock data and the other trying to release it. The alternative is that CIOs and CDOs can cooperate to improve the flow of information, with the common goal of gaining the maximum value from consented-to data to the benefit of the customer.
For example, a bank’s mortgage division could secure the customer’s permission to help the client move into their new home by sharing their move-in date with providers of services, such as utilities, moving companies, and internet service providers. The bank will then function as a middleman, securing customized offers and services for customers and notifying service providers of changes to addresses and the move-in date. The result is a data-driven ecosystem that is reliable and secure, and controlled by the consumer. It enhances the customer experience by removing them from the burdensome task of chores to be completed before moving and also providing a user experience that is less concerned with the cost of mortgages and much more focused on welcoming customers to their new residence.
The Data-Sharing Future
This hypothetical scenario is only one of the many innovations in data that will become possible in a brand new data economy based on trust, insight, and flow. Cooperatives for data are now becoming more common in a few regions in the United States. New companies are popping up to create the infrastructure required to facilitate these types of agreements for data sharing. The rise of agents, data representatives, and custodians allows managing consent on an enormous scale, acting as centers for the users’ data and acting as their agents in the market.